SE Asian firm slow to reform, WB says

SE Asian firm slow to reform, WB says

WASHINGTON (DPA): Southeast Asia is lagging behind in measures
to reform its private sector and growth could suffer as foreign
direct investment moves to more favorable business environments,
said a World Bank senior official.

In an interview with Deutsche Press-Agentur, dpa,
International Finance Corporation head Peter Woicke had harsh
words for the "Asian Tigers" as they have failed to follow
through on reforms following the 1997 Asian finance crisis.

He said investment conditions in emerging markets were less
favorable than a couple years ago and continuing legal hurdles
and reluctance from company owners to reform would hurt business
prospects in the long run.

"I think we're somewhat disappointed about the pace of
reforms, the pace of restructuring by companies in Asia. I think
these Asian countries were hoping to outgrow their problems, they
had very high growth after Asian crisis.

"But with the U.S. economy slowing down... I think these
countries are facing some restructuring to be done," said Woicke,
who was chairman of J.P. Morgan Securities in Asia, based in
Singapore, before he took the job at IFC.

"Asia at some point will have to bite the bullet and engage in
some serious restructuring," he said.

The IFC, which as the private investment arm of the World
Bank, invests directly in companies or the finance sector, has
invested 33 per cent of its approximately 3 billion dollar
portfolio in East Asia.

Woicke said it has been "very, very difficult" to restructure
companies in Thailand mostly due to reluctance by company owners
who often bring lawsuits against the IFC to fight the changes it
demands.

In Indonesia, foreign investment has fled because the
country's judiciary is in shambles, said Woicke, who called it a
"classical case" for IFC involvement because private investors
are staying away.

"The judicial system just doesn't work well enough to give
creditors the rights they should have. The hassle which we're
facing in some of these countries is disappointing, frustrating
and in the end doesn't help the local banking system."

Woicke said the IFC was no longer involved in South Korea
after it invested heavily in 1998 to pull the country out of the
finance crisis. He said private investment flows had returned to
Korea but the country needed to continue with reforms.

He said China was a bright spot in the region because he was
moving forward with crucial private sector reforms.

"The country I'm extremely enthusiastic about is China. It is
recognizing how important the private sector is.

"China continues to receive a lot of foreign direct
investment. It is creating worry in Southeast Asia that China is
receiving all of foreign direct investment, and less will be left
for the rest of the region."